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News/Business. Brian Shactman. Business news including in-depth analysis of worldwide trends.

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China 34, Us 19, U.s. 15, Christine 12, Brussels 11, Ross 10, Eu 10, United States 10, Imf 7, Washington 7, Daimler 5, Ubs 5, Renault 5, Carolina 5, Singapore 5, New York 5, Ben Bernanke 4, Cnbc 4, S&p 4, Telstra 4,
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  CNBC    Worldwide Exchange    News/Business. Brian Shactman. Business news  
   including in-depth analysis of worldwide trends.  

    February 11, 2010
    4:00 - 5:59am EST  

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welcome to "worldwide exchange." here in asia, chinese consumer inflation unexpectedly flowed into january, but lending and factory gain inflation rose. >> meanwhile, in europe, a rescue plan has been approved for grease. information is leaking from the summit in brussels.
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>> in the united states, the t.a.r.p. watchdog channel says a waive of commercial can he faults could now threaten hundreds of banks and the economic recovery. >> and welcome to "worldwide exchange." i'm christine tan here in asia where it's 5:00 p.m. here in the evening. in singapore, let's get a quick view of where asian markets are closed today. japan and taiwan are closed for public holidays, so these two markets missing out on the broad rally we're seeing here in asia. the kospi up 1.8%. the hang seng is up 1.9%. cpi in china coming in less than expecteded or dipping unexpectedly and that seems to be easing fears of aggressive tightening over in china. the shanghai composite managing to eek out gains, bombay sensex up 1.3% and the australian market up 0.9%.
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this is how the picture is looking for the global index, 26 points higher, 4,261. ross, how are your stocks doing? >> over here in europe, christine, an hour into trade they're up. and near the session highs right now for the ftse 100. xetra dax up 0.6%, 0.8% for the smi up 1.25%. banks are firmer this morning. we're getting continuing reports out there. we are nearing some kind of agreement on aid for greece. but quite how, what and when or the form that will take, we're still not quite sure. there's a lot of conflicting reports on this. we will talk about it fairly shortly and bring you the latest. we just got the latest ia out at the moment. the global forecast for demand has been revised up for 2010. it's a morrow bust imf/gdp
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option and persistently weak oecd demand. the crude oil price at the moment, nudging slightly at 74.68. we are nudging up. we're hopeful something today will be announced on greece, but you never can be too sure, nicole. good morning to you. >> good morning to you. here in the united states is where the markets are likely to open. is dow is about 38 above fair value right now. u.s. equities finished mostly lower yesterday. the dow falling 20 to 1038. nasdaq futures are up about 7 above fair value right now and s&p futures are hovering about 4 above fair value. ross, as you know, volumes were a bit contrained yesterday by the big east coast snowstorm. >> yeah, absolutely. and the snowstorm in brussels, which is fairly important, because that's where we've got an eu summit and apparently
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european leader have agreed on more measures for athens to over come its fiscal problems. finance ministers are discussing a rescue plan. the plan will apparently draw on the expertise of the european central bank and the imf. but the government revealed that details will not draw on imf funds. carolina climenti is in brussels, shielded from the snow, we home, carolina. what do we know at the moment? we're getting a lot of speculation. >> a lot of spec a lot of conflicting information. while we hear from some officials that there will be a rescue package coming out of this meeting, we hear from some german officials, that germany doesn't know about the financial package yet. they are still talking about it. what we know for sure is that this meeting was supposed to start at 10:00 a.m. right now, it's been delayed till noon. at the same time, we know that jean-claude trichet are in this
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building right now having bylat wall meetings with other european leaders. we don't know who they are. talking to them about what to do and they should come out of this meeting and go to the whole meeting with all the european heads of state at noon when they are going to present their plan. what is a euro zone or what is a european union or even what are some countries of the eu going to be doing to help greece? what we know for sure, as well, ross, is that whatever they present as a financial rescue, and i heard some rumors in brussels yesterday that jobs could be state banks buying bond to give grooets more time to work on the reforms or even a package for banks. we have a strong exposure to greece instead of helping greece directly so jobs will take away a little bit of the systemic risk of the situation, even if it's in direct help. whatever it is, they are going
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to put additional measures for greece to go ahead, just like the imf would do. much tough every measures than greece has announced so far. >> jobs comes down at the end, to, whether there will be an absolute transfer of funds, whether there will be a greek debt buying program or not. jobs could just be words and not actually any financial measures. if greece delivers on what they suggest they need to, they won't need to put any money on the table. >> they don't need to. in fact, it's a matter of semantics, if you want. in fact, i was talking to an official from luxembourg yesterday. he said he would bet his own money that there won't be a bailout in this meeting. but then, what do you consider a bailout, that there will be money on the table if greece
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needs jobs or is it buying greek debt today? what exactly is a bailout? promise or the money there? this is a semantics problem that you have to be very clear about what they are doing. hopefully the markets will understand that as a strong measure and won't be more pressure on the greek debt. but there is a possibility that what will come out from here will only be words, really. >> so heavy on words, light on detail. >> joining us now is paul nomura. markets are building so much expectations into a rescue package. let's just say something happens or something bad happens and it doesn't happen. does that mean the markets will be poised for a big sell-off? >> i don't think so.
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in the last five trading days, credit spreads are flat, both high yield and investment grade currencies are reacting positively over the last three or four days. and sovereign credit default swaps are dropping. so in general, what we have is kind of a tepid response to the whole cavalcade of weird news and news we don't understand. but sovereign cdss have come down a little. the markets are fairly reactive. if there's any sort of mild news, i think we will have a positive week. plus we got some pretty good inflation data today. >> so if there is indeed a package where greece is coming through, news hasn't been priced in, jobs will continue to rally from here on wards? >> oh, yeah, throughout the week. equities everywhere have been flat, soggy, that's the best
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word i've heard investors talk about the last few days. unreactive, flat, no volume, great conviction. if there's anything mildly positive, it's a about possibility of a move in equities. >> you know, we did get those numbers out in china, as well. ppi prices rising, bank lending rising. when sort of case scenario are you building up in japan when it comes to interest rates? >> well, in the case of china, at the house, we've been very much on top of this. we think that the inflation problems are overblown and there is going to be a significant year on year effect in terms of high numbers. but that overall for the rest of the year, we should be seeing numbers that are pretty much on
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the low side. plus, much more importantly, what is happening with the world right now, especially in southern europe, is quite frankly deflationary. it is causing banks to be scared. it is creating fear in people's risk appetite. this is the way the currencies are reacting and i think what that means is that we're going to have even lower credit growth than we have anticipated. we're looking at credit growth. that is going to be negative u.s., negative uk and negative europe for the next few months. i don't know how you get inflation out of that. if we have the possibility of somewhat of a downturn in the west, china will feel somewhat compelled to turn on the tap again and i think that's exactly what is going to happen as we move into the springtime. that's our bed. >> pault, i want to get your bet on bill miller's statement. this is nicole lapin from the united states. he came out and said a lot of investors continue to maintain,
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quote, a per verse affinity for bonds and now it's perhaps time to move into equities. would you agree with that? >> that's a good one. i've been on the phone all day with investors. there are many investors who think this may be the time to buy some distressed government bonds for the reason that we should get something of a rescue. which is going to be a painful rescue. this is not a pain free rescue for greece. if we do that in a world where the banks are going to be compelled to own more and more ponds, i think we'll get a tepid recovery, no private growth to the private sector. and in a world where there is very much pressure, bonds could per versely rally.
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>> so per verse rally, per verse affinity for bonds, we'll continue the conversation, paul shulty. we'll continue and we thank you for your time. now the stories from around the world, a commercial of real estate defaults could wipe out hundreds of community banks in the united states. vacancy rates are mrofg higher and rents lower, forcing a lot of developers to default on their loans. xhushlt loan losses could hit 300 billion in the next three years and hurting small and mid sized banks. panel chair elizabeth warren says this could overwhelm an already weak financial system. and less than a month after calling wall street bonuses object scene, president obama has now declined to take a shot at the pay of jpmorgan's ceo
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jamie dimon and goldman sachs lloyd blank fine. the president says, they're savvy businessmen and i don't be grudge people success or wealth. that's a direct quote. dimon received $17 million in stock bonus. blank fine $9 million. the white house says that doesn't necessarily suggest the government is taking a different tone with bankers. in the interview, he said shareholders should be given a say on pay, christine, creating a lot of buzz in the united states today. >> nicole, we've been talking about this data out of china, should be cooling expectations of imminent interest rate hikes. we have cpi data slowing to 1.5% in germany from a year ago. that was less than the 2% figure economists had been looking for. ppi came in slightly below forecast at 3.4% in the year to january. central banks lent out $2.3 well
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billion in january, slightly more than what economists had forecast. and we're keeping an eye on rio tinto. the company unveiled a full year profit and offered a bullish outlook for commodities, demand. full-year profit was up 33% from the previous year. rio says it's upbeat about commodity price necessary 2010 thanks to ongoing recovery in china and the recovery in the oecd region. separately, the case against china based employees of rio tinto has been confirmed. if found guilty, the employees could face up to seven years in jail on the commercial secrets charge and up to 20 years on the bribery charges. >> still to come on today's program, credit suisse has published fourth quarter earnings today. carolin schober will join us
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with the latest from zurich. >> reporter: and here in zurich, the low expectations from the company giving us a bullish outlook for 2010.
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okay. these are the shots of where the eu summit is taking place today in brussels. that's where the journalists are gathered. they'll be waiting to hear whether there is some kind of an agreement on a package measures for greece. there's a lot of speculation surrounding what that might include. but there's probably a thought here that the bailout is rather a creative stretch of language. whatever they announced, jobs probably won't be an announcement of a transfer. a lot of words and support, but maybe no actual money on the table will be announced. we'll have to wait and see how that pans out. while we're waiting for that, we'll see what's happening with the fixed income markets today. certainly the 10-year yield is nudging higher. they're pricing in the likelihood that leaders meeting today will sort of come out with something. that's why we've got the bund heading up higher, because what that will do is put pressure on
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the german bund measure. u.s. treasury, ticking slightly on the yield, holding fairly steady today. investors waiting for the outcome of that eu meeting, as well, and nursing losses from the federal reserve chief ben bernanke. we've got all the details. christine, we're waiting for the timing. >> that's right. let's see the properties expect of a package for gooes, is it having any impact on the euro right now? euro/dollar, 1.3763. euro is higher against sterling, 0.8841. euro/dollar 1.3763. dollar/yen, standing at 90 evening. a lot of eyes on what will happen with the package. nicole. >> the snowstorm may gone in the i'd, but it's reeking havoc in the east coast, especially in washington. government offices are closed for a fourth straight day at the estimated cost of $100 million
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in lost productivity. the senate will be back in session this afternoon, but no votes are scheduled. the weekly u.s. inventory data which normally comes out on wednesday has been postponed again until friday. january retail sales in december business inventories which were supposed to come out today have moved to friday. we still get weekly jobless claims at 8:30 new york time and they're forecast to drop by 12,000 to a total of had 68,000. pepsi corp., levi corp. and viacom will report earnings before the bell. new york fashion week starts offering the public a first look at designer collections for this fall. jobs will be the last time the event will be held in new york's bryant park. jobs then moves to lincoln center. he know you're looking closely at these chic male fashions. i don't know if that would look good on you necessarily, but jobs will move to lincoln center, in case you're warning, and if you want to attend.
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>> those hats are quite interesting, aren't they? >> still with your pink/blue tie shirt combination. that's looking quite dashing today, ross. >> do you think that would hurt wab big hat and a red whatever that is, scarf over my face? we could try jobs. >> no. >> that's a good look. that's what i'm going for. the band with the -- >> stick with me, ross. >> right. credit suisse has reported a strong start in contrast with rival swiss bank ubs. in the fourth quarter net profits missed forecasts. carol carolin schober joins us with more. a bit of a contract between you say ubs and credit suisse. >> yes, exactly. let me start with the positives for credit suisse. you already mentioned it's a positive outlook for 2010. that explains some of the share
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outprice performance. the company had a strong start to the year with very good client activity. the connection pipeline were the strongest. secondly, net management inflows were at 5.4 billion swiss francs in the fourth quarter. if you compare that with ubs, that was extremely strong. the strongest impulse came from the americas and asia. also the private banking margin was higher than expected at 130 basis points. so several positive take aways here. still a few drou backs if you take a look at these numbers here. especially if fourth quarter net profit, that was below expect ages as you mentioned at 800 million swiss francs. even if you take the one up charges out of there, that was the u.s. settlement. credit charges pretax was still below expectations. why? we saw a higher overall tax rate and let me point out that fixed income revenues in its
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investment bank were down more than 60%. we know investment banking revenues would go down. they would normalize and this is a higher or bigger job than anticipated. with that, ross, let me send jobs back over to you. >> thank you carolin for that. the ftse 100 up 1.25%. a little less for the cac 40 and smi up 1.3%. we'll check in now with joshua raymond from citi index. joshua, we are firmer this morning. is that risk appetite on the back of hopeful news surrounding greece or rio tinto? what's going on? >> quite a few things, actually. greece and rio tinto are playing its part. we have good data early this morning from china and australia, those jobs claims were very positive on the market. so there's a number of things that are lifting us today and
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why we're quite high. rio has come out with better than expected second half year results, which is slightly good. they're slightly more upbeat than bhp were. they've said the second half has picked up and they expect that to continue, as well. so that is lifting the mining stocks and mining stocks are leading the ftse higher. the seconder is up about 3.5% at the moment. one stock to touch on the downside is bt. bt is suffering today, shares are off around 7%. they came out with their quart h quarter three earnings, which is largely maybe towards the higher end than the market had expected. but the real problems they're suffering now is from their pension deficit. in 2008, jobs hit 9 billion pounds. they've got 17-year recovery plan. that's going to go for the pension. so that is really what is lagging down on the stock. but all eyes on greece today and hopefully we'll get something confirmed in the around.
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>> so what will the detail be? joshua, thanks for that. the xetra dax up around 0.6%. annette is in frankfurt with the latest. daimler and thyssenkrupp getting some focus. >> yes, indeed. tuesdayen group is up on better than expected earnings which is mainly belonging to south kitta. both big steelmaker necessary germany are up. on the down side, we have daimler down by roughly a percentage point as daimler is said to increase its stake in a heavy vehicle producer in russia and the russian market is now down. >> and what is going on win finnon? pension funds appear to be flexing their muscle. >> and that will be the first
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time in corporate germany that some outside investors have say in who is heading up an advisory board. the uproar is quite heavy and it looks like that the decision might be quite at par between those backing the candidate from infineon who is in the supervisory board. that's why others are saying, we need to have a change here. that's all from here. back to you, ross. >> thanks for that, annette. stephane is in paris. the cac 40 is up 0.75%. stephane, alcatel-lucent today seems to have lowered their margin for today. what's the impact? >> they are now expecting the margin to be between 1% and 5%. that's compared to the previous guidance of 5%. they still hope to reached 9% margins for the full year. the revenue is below
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expectations. the net profit is due only to some one-time items. very disappointing items. the stock is down 6.8%. air france klm, wider than expected losses, nearly 3 million euros. the company warned that the situation won't improve in the next quarter and the company is bracing itself for a record annual loss. the stock is down more than %. and in the car sector, we have numbers from renault. wider than expected costs for the full year. the company is expecting a 10 pex contraction in europe for to 2010. this is not good. and the stock is down 3.8%. >> that is not good. earlier in the week, they had good news out of nissan. has that squared those gains off? >> yeah. we were expecting actually, maybe, some kind of positive announcement from renault, actually, maybe a good surprise from the carmaker. given what nissan posted
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earlier, stronger than expected numbers for the third quarter and raised its guidance for the full year. but that being said, renault is facing a huge problem on the european market, which is the main market for renault. 10% decline in 2010. that's very significant and that's the reason why the stock is down today. ross. >> stephane, thank you. >> coming up on "worldwide exchange," contra dicktory data out of "worldwide exchange." with inflation cpi lower, will there be more tightening measures from beijing? >> and we'll keep all eyes, as well, on brussels. what strings will be attached?
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this is "worldwide exchange." here are the headlines from around the globe. >> here in asia, the focus is on china, consumer inflation unexpectedly flowed in january, but lending and factory inflation rose. >> here in europe, a rescue plan has been approved for grease. details are leaking from the summit in brussels. >> in the united states, sounding the alarm, a watchdog panel says a waive of threatening defaults could
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threaten small banks and the waive of economic recovery. >> you're watching cnbc's "worldwide exchange." christine tan, nicole lapin and ross westgate. global equities are a little firmer today. the cnbc ftse 100 up 21 points. hopes are that there will be some sort of rescue for greece, whatever that may entail. christine has the reaction to the asian markets there. >> hopes of what you talked about, hopes of a package for greece sending markets in asia higher. bear in mind, we have japan and taiwan closed for a public holiday. but the other markets moved higher on prospects of a bailout for greece. the south korean bank signaled they would keep monetary policy loose no for now. the inflation came in lower than expected. marginal gains were muted there
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because a lot of people were surging on bank lending and ppi data. the bombay sensex is up 0.4%. so overall, abroad, a nice finish here in asia. nicole. >> good morning, christine. in the united states, we're just after 4:30 in the morning. this is how we're expecting markets to open in the i'd. higher across the board after a choppy session yesterday. the dow 17 positive fair value right now. s&p futures about 2 above fair value and nasdaq futures are 7 above fair value. not too many overriding above the market action yesterday. the discussions in europe garnered the most attention. let's continue that discussion with david page. and staying with us, we continue to have our conversation with
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paul shulty, managing director at nomura. david, a lot of attention with the fed yesterday and no realtime table. the fed said jobs may be before long, that's a direct quote, an increase in the discount rate and the fed funds rate. what does that mean to you? >> i think bernanke was presenting how the federal reserve would tighten policy, not when. there were a number of points where he talked more widening about tightening, mentioning at the appropriate times, repeating early on in the statement that there will be an extended period. and i think this was something that the fed was asked to do by congress to provide a measure of how the fed was going to tighten policy and when. but it's by no means a signal that the federal reserve is thinking about tightening anytime soon nor that the fed
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was wanting to tighten that lending signal. i think jobs literately was an explanation. >> yeah. this is paul shchulte. i was going to ask you, if you take into consideration people who have stopped looking for work, we have an unemployment rate near 11% and credit growth which is accelerating to minus five, not only for the u.s. but also in the uk. do you think any talk of raising interest rates is at all appropriate? i think that's how trichet got in trouble in november. >> i think if bernanke had been left to his own devices, he wouldn't have made that speech. but he was asked to provide an explanation of how the federal reserve would tighten and he made jobs very clear that it wasn't a question of timing.
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and i think tun employment position is something that is key. as you say, there is a significant increase in economic inactivity and i think the federal reserve will want to see a significant improvement in the late market and probably a fall in unemployment before jobs starts thinking of delivering on that tightening and monetary policy. >> david and paul, i want to pose this to both of you. david, first, your reaction about the government oversight panel now giving us a warning about commercial real estate losses, wiping out a lot of community banks. it's tightening up, drying up even more credit. is commercial real estate the elephant in the room? is it really the next shoe to drop? >> it is. but eyes are very focused on it which perhaps wasn't the case for residential mortgages. the federal reserve and certainly the beige books have
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been monitoring the deterioration in the commercial market for some time. they've been acknowledging that this is going to be a large hit and certainly banks are provisioning for that. there will always been an element of uncertainty. the fed has pointed to the fact that that suggest this commercial property problem is something that is going to see further bank failures. will it be a repeat of what we've seen over the last couple of years? we hope not. that shook me and it should be much more contained. >> well, i think also i'd add to that that the commercial property market is about 85% smaller than the residential market and we have a residential market that has essentially been propped up by the bank, the federal reserve. so i'm still concerned that if you withdraw that support of the residential property market through the federal reserve through fannie mae and freddie mac, we'll still have a problem with the residential markets.
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so i think the el fapt in the room is the residential markets and the way it's been held up by the central bank and if you withdraw support from the central bank, you could have a potential problem resurfacing again. i think the elephant is the residential market. and david, sort of following on from that, with bank lending shrinking, at a fairly large rate, it is highly unlikely the fed is going to reduce or shrink bank reserves in that situation. some might say that situation gets worse, jobs plight still be a case for extending its asset program. >> part of the reason why it's remained positive is because of its balance sheet. that program is set to close in the send they're not going to expand jobs further as of beyond march. the fed will be keenly watching to see how that rate comes through. we are starting to see very, very early signs of pick up coming through in housing in the sense that the house credit
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extension has been buying tax credit, has led to some pick up in housing. but it's still ve, very weak and i think it's something that the fed will be watching closely over the next three months. so it suggests that tightening is not on the fed's agenda. >> and david, speaking of bank lending within, over in china, bank lending is still surging. do you think that will be enough for chinese authorities or chinese central banks to take a less aggressive stance when it comes to monetary tightening? >> no. i think what the central bank is trying to do at the moment is manage that bank lending specifically. ite well aware that jobs may not necessary by be on a month to month basis, so a big rise in bank lending period does not rise to cpi overnight. but it's very concerned about asset prices over there, asset price inflation which is more correlated to high levels of lending. so i expect there will be a hiatus over the period.
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and bear in mind, this is a similar pattern to what we saw in q1 of 2009. if it sees that lending pattern continuing, i think we'll see further market tightening as that may ultimately lead to a proper monetary policy tightening as we move into the second quarter of this year. >> good conversation, guys. we appreciate jobs. david package, economist from investec. that's thank your time. paul schulte, please stay with us. let's get you some big stories we're following from around the world today. we start with aig pay in the united states has launched a new grading system to determine how employees get their bonuses and incentives. the plan, which is being pushed by its ceo, ranks employees of a scale of one to four based on how they do relative to their peers. the top rank goes to only 10% of employees who are eligible for that higher pay incentive. initially, the incentive will
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apply to a small group. >> nicole, the british prime minister says the world's leading economies are getting close to agreeing on a global banking tax. gordon brown will back such a tax and hopes jobs can be agreed on in principal by leaders at a g-20 summit. >> well, over in australia, the largest phone company telstra has dialed in with its first half profits, which fell 3.3% from a year ago to $1.7 billion. slightly lower than forecast. the ceo david dody explained what hit telstra's bottom line. >> we've seen a number of declines in calls, that's local, national to international and
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mobile to mobile. and it's accelerating. and it has an enormous impact on the business and it's very hard to recover in the short-term. >> telstra kept its outlook unchanged today. this is how shares are doing despite a slightly tougher environment in the second half of the year. telstra at 3 oddly 22. coming up next on "worldwide exchange," we will bring you a first on cnbc interview with the ceo of southeast asia's largest developer, capital land. is the company concerned about further policy tightening in china? find out. before that, here is a quick look at how gold is trading. risk aversion really fading.
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welcome back to "worldwide exchange." you are looking at a harbor shot of hong kong and this is what it's looking like at 5:45 in the evening. i'm told it's 26 degrees celsius and is looking rather cloudy. 26 degrees celsius. >> that's a little warm. >> the in singapore, we only get that during nighttimes, right? >> if only we had that temperature during the daytime.
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>> how are the markets doing today? >> the temperature was pretty good in some of the markets that were open, christine. we had positive gains across the board in general. let's start with the markets that were open up in korea, we had a fairly solid session in that equity market. the kospi kissing the 1600 level, closing 16 points below that today. sentiment got a boost from the fact that the bank kept those rates at, once again, the record low of about 2%. the governor saying that pretty much they're going to have low rates for sometime to come, at least in fact first half. also, sentiment got a boost on the back of the china inflationary data in january, showing that inflation rose 1.5%, which came in quite a bit below the economists' forecasts. so all the stocks vulnerable to the china growth story, being a commodity sensitive stocks, korea, they all rose substantially.
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meanwhi meanwhile, south korea had a pretty positive day, as well. so we saw a solid session there. hana financial, they came out with results after the bell, beat expectations thanks to low loan losses and high net interest miners. moving on to singapore, capital land, the biggest property developer in southeast asia just came out with its fourth quarter numbers today. on the face of jobs, the net profit was about 868 million singapore dollars. but if you strip out the one-time gains in the listing of the company there, they had a gain of about $899 million singapore dollars. for the full year, the results dropped in terms of net profit to 16% to fill over a billion singapore dollars. so overall, when you factor in the fact that 2009 was a very difficult year for the -- not just property companies, but companies in general, jobs wasn't too bad of a result. i sat down in a first on cnbc interview with the ceo this
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morning and we talked about a variety of issues, including whether there is a property bubble ensuing in the china market. have a listen to what he had to say. >> the question is whether these bubbles are cost-effective. in other words, they're just going for capital growth. at present, the way i look at jobs in china, there's fundamental growth. that's demand. and demand of 20 million a year by new families, we'll forget china is 47% of the -- which is japan 45 years ago. so urbanization requires a lot of fiscal demand, which is far, far into supply. the next question is the economic growth in affordability, meaning can the people afford to buy.
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in the bigger cities, they have costs. but at a national level, they are only 37%. big low at 50% which was bank wag sent. so there's affordability. would there be a subprime problem? that is negative because in china, 50% of people buy cash. the rest of the 50%, you know, demand 70% of the values. >> the chinese authorities seem to be a little nervous about the acceleration of asset prices within those tier one cities in beijing and shanghai and there's been a lot of debate about them after the lunar new year clamping down on the excessive loan growth that we've seen in china record levels in 2009 and that money spills into the property sector. if we see more action from the chiep he's authorities, and i want to get your take on where you think they need to take more
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action, how would that affect capital land's business? >> i always say that we welcome them to take action to manage speculation. insofar as these things are done logically, i often am a bystander. the mass market is different. you have upright the same -- to the luxury market. and insofar as the developed rules and regulation to control liquidity, to control loans and to control speculative investment, in other words, don't keep on allowing people to build luxury apartments and at the same time provide liquidity to generate the bubble. if you do toss things, we will be -- so the fact that they are intervening is something that we take comfort in. >> and that is a first on cnbc interview with the ceo of asia's largest property developer,
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capital dd and, talking about the china market which, of course, christine, is a big, big mblth for capitaland. they boosted their presence there. 36% of their asset res now in china. >> did he say anything about the company's focus in china in terms of the types of properties they see opportunities in? did he specify which areas? >> capitaland is big in the residential sector, the property market, not just in singapore, but also in china. he did say that they see supply constraints within that area. it's interesting that he didn't talk much about commercial property insofar as office commercial property, but he did say that residential was their primary focus and interestingly, while we've been debating this issue about property prices in china, they are looking to take advantage of affordable housing. it's becoming unaffordable in some of these tier one cities as he indicated in the interview with me and there's an opportunity there for the
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taking. and what's interesting is back in december at the mogan stanley interviewing the head of china banker, she said the same thing. they all don't degree. there's no property bubble in their eyes and there are opportunities in the situation they're facing right now to supply affordable, middle/low income housing for the rest of the population outside of those tier one cities. >> so overall very bullish. did he signal any risk that he faces or that he sees on the horizon? >> well, the interesting part, yes, he did. in the press conference this morning, he was asked that question by an abdomen list. actually, the biggest risk he had at the moment is their investments in the gcc countries, in bahrain and abu dhabi. the one in bahrain, he had that's the biggest one they're facing. i don't think they're really concerned about that and it's not going to be any material problem for the overall
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financial results. >> great stuff, adam. thank you very much for that. let's hop over to india and join ayesha faridi live from mumbai with the india business report. ayesha. >> thanks for that, christine. all eye res pointing toward europe. so holding steady, about 4,800 for the nifty. jobs has turned out to be a good day. but you have to remember that we have a truncated week. you are seeing some bit of short covering kick in. holding up almost 1.5% for the nifty, likewise for the sensex, as well, and the broader markets are trading strongly today. the leader in the pack is the entire autos basket. they want to give their take on the fuel price hike, but that hasn't happened as of yet. you have hsbc, bpcl, the three
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omcs are holding good. you have the metals back which is looking strong. real estate come infrastructure plays is not looking bad. but the big event awaits us on 26 february we'll have the union budgets. so you have a whole lot of themes doing the rounds. you have the entire export sector, lever stocks, all of them are holding up. the budget will be two days before the union budget. all of that is looking good. all the current indices are holding up very well in trade. you have the agriculture space which is looking very strong. so a whole lot of rice stocks are holding up very well in trade, as well. >> ayesha faridi, live in mumbai, thank you for that. paul schulte, managing director, nomura incident ir national. paul, before we let you go, you
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heard what paul was talking about. capit capitaland doing very well in china. what's your feeling on the real estate market, is that something you want to get into? well, three things. i've talked to many investors who have come back from china in the last three or four days. they talk to government officials who seem prerelaxed about the inflation issue. so i think that's an important participate of this. number two, in the issue of property, i think the gentleman from capitaland made a good point. china has 700 cities with population of 500,000 or more. and the demand for housing is something that we can barely comprehend in the west and in the central of china, we're talking about 13 germanys. the reconstruction from '46 to
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'54, jobs took eight years for that to be completed and chen commodity prices fell apart. but we're talking about 13 germanys that are under construction right now and moving on this per capital ya journey. three real quick, i strongly agree. i think china has all the look and feel and smell of japan in the early '70s or late '60s. so i think we have a long, long way to go before we can talk about china being overheated. >> but is china the place you want to be to make money as a global investor? >> well, first of all, in terms of technicals, i think the technicals are looking -- we were warning about the technicals last week and the week before in china and sort of waiving people off. obviously, everyone has left today. hong kong is empty. i guarantee you it's empty. even the taxi drivers aren't
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around today. and so everyone is taking their trades off and no one is going to put any real, meaningful trades auto until they come back from chinese new year. so right now, i think debt will go quiet quiet. but there is an interesting event here with low inflation numbers and with a potential resolution from greece. so i think people should come back from chinese new year starting to buy rather than sell. >> paul, thank you very much for being here. jobs was good to have you. coming up next on "worldwide exchange," greece is the word. that sound like a song. further officials discuss a bailout for greece. >> and ahead of that, we'll show you where the ten-year is trading. pretty flat.
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welcome to cnbc's "worldwide exchange." the headlines from around the globe. >> in the united states, the t.a.r.p. watchdog panel says a waive of commercial defaults could threaten banks and the economic recovery. >> in europe, a rescue plan is reportedly being agreed to for
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greece. >> and here in asia, chinese consumer inflation slowed in january, but lending and factory inflation rose. >> nice to have you with us here on "worldwide exchange." i'm nicole lapin. it is 5:00 in the morning on wall street. welcome to the start offer global trading day. let's take a look at how u.s. markets are likely to open. across the board, higher after a choppy session yesterday with equities losing just a little bit in are a choppy session. the dow is about 28 above fair value right now. nasdaq futures 7 above fair value. markets, ross, are betting on the eu trying to help greece out through its fiscal crisis, something i know you guys are watching, as well. >> absolutely, nicole. it's all about whether we get some deal on the table for greece. there are reports that some sort
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of package has been agreed. meanwhile, the german authorities suggesting nothing has been agreed to. angela merkel is just arising at the summit. no, there we go, that is the greek prime minister. so that will be the man all the focus will be on. he's been having bilateral meetings ahead of this summit. he had, look, we don't need financial aid. what we need is political support rather than anything in terms of actually getting money. as far as the european stock markets are concerned, they have been up this morning on hopes that there will be something announced. the ftse 100 is up 1%. the xetra dax up 0.3%. the cac up 0.75% and the smi is up 1.3%. president sarkozy is just arr e arriving, as well. some private talks already have been going on. christine. >> hey, ross, i want to flag to
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you some flashes we've seen coming up. the china bank coming out to say jobs will maintain loose monetary recovery. jobs targets about 17% growth for 2010. jobs wants to use different monetary policy to ensure credit balance issuance and jobs wants to avoid big lending swings between the months and quarters. and to ensure stable economic growth while controlling inflation expectations. so these are some of the things coming up on the wires right now, coming up from the chinese central bank. in terms of the currency markets, the euro continues to be in focus. of course, a rescue package for greece continues to weigh on the euro. euro/dollar at 1.3749. euro is stronger against sterling. 0.8824. and dollar/yen, 89.88.
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the numbers are getting way too small for me to read, ross. >> yes, i know that feeling. right. so the prime minister of greece says he doesn't wish to seek help from the imf. just in, mr. papendraou arrived. along with nicholas sarkozy. the gocht has revealed the details. carolina climente is in brussels with more. what do you think we might reasonably expect today in terms of an announcement? >> well, ross, obviously, the details are being decided right now as angela merkel arrived here in this building an our ago as well as the prime minister of greece, george papendraough,
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they are all here probably discussing the details of this announcement and what's going to come after this meeting. now, what i can tell you is that if there's not a proper financial package, a financial rescue package for greece coming out of this meeting, there will certainly be a very strong statement on what the european union will do. if not a proper bailout, there will be really strong b words. and together with these strong words, the greek prime minister is going to take home some additional measures that he will have to implement if he wants to have the backing of the european union for his actions from now on. so what we know is that these measures are going to be really tough. they are measures more or less like the imf normally do. and i spoke with the prime minister of latvia a little earlier. he was in the exact same situation as the prime minister of greece is now. and i asked him, what kind of
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measures he expects to hear for greece. >> there are standards for companies that are about to be bailed out and the first condition is to quickly reduce budget deficit. in the case of latvia, we held on to well over 10% gdp fiscal adjustment already. so i would expect something of the similar scale being proposed to greece. >> as you know, the latin prime minister has public wagers on more than 30% last year to achieve the budget deficit cuts last year during a one year period. he had that to keep -- to voice public unrest in greece, the prime minister of greece should keep the communication going a lot with his own population. ross. >> carolina, thanks for that for
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now. joining us in the studio is kit dukes. kit, let's say they get a strong statement today. let's say they talk about the different ways a sovereign can be supported in terms of liquidity, but they don't we're we're not actually going to do jobs. will that be enough to take the heat off greece? >> very temporarily. i don't think the ig issue for greece is whether the rest of the euro zone will default because everyone is taking advantage of no one can afford to have that happen. in other words, if the rest of the euro zone provides confidence, can greece get those measures through? if not, the crisis goes away for a day or two, but not longer. and either way, remember, this is a global sovereign debt crisis. it's going to go somewhere else where it's done here. >> yeah. i mean, we keep talking about a
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bailout and a package. i wonder if that is the wrong word. it's lily unlikely there will be any announcement of any money on the table or anybody has announced that they're going to be buying greek debt. once we've understood that, does risk appetite for sovereign debt go up, or not? >> well, jobs will go up in the sense that greek debt is cheaper than someone else's debt. if we stand behind greece and say, look, we won't let them default, maybe you get some buyers turning up within greece. but i still think investors will be shying away from sovereign debt according to the most boring, stable, sovereign debt that they can find or else sticking their money under a mattress. >> carolina. >> kit, i would like to ask you, another idea floating around here in brussels was not to
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directly help the greek government, but in fact, to create sort of a financial aid for the bax which have more exposure to greece, and therefore, trying to diminish the systemic risk of the situation. do you think that would be a good idea? >> jobs can help to avoid jobs. it's a question then of saying what can we do to keep from a collapse in confidence, to allow the greek banks go on funding the greek government. but i don't think we can get away with what greece need. greece doesn't have the domestic will to get is its tax collection and its economic system to the place which is more stable. and they're really looking for help with that, political help to be able to go back to people striking and say, look b, we have toen force these draconian public sector wage cuts. if not, we're going to go bust and frankly, these people will help us, but it's not our
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choice. so helping the greek banks buy greek xhashl debt, i don't know. what needs to happen is confidence in greece needs to be solved. then we'll move on to wider issues. >> hey, kit, this is christine here. let's say we get a package for greece. to what accident does this create a condition of moral hazard. will spain and portugal have to have other conditions, as well. >> that depends on the conditions. yes, i think the statement is still out there, as of now, which is that the euro zone's achilles heel is the need too void a euro zone member country running into massive financial difficulties. greece is 3% of the euro zone, easy to solve. spain is four times bigger and a much bigger situation.
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then the whole euro zone gets itself into a steady different position. then we're going to worry about whether we want to invest any money in europe at all. >> mean tile, while europe is facing a lot of problems, will that focus a lot of investors into some other parts of the world? about that shift into asia or other areas of the world because of the problems we're seeing in europe? >> well, the u.s. has its own sovereign credibility problems. jobs has a lot of bonds to sell and it's winding down its quantitative easing. the reality of all of this is the developing economies have developed far, far, far too much money as they've transferred to debt. and most areas are looking at the parts of the world where that hasn't happened. so that trend is there. what you need to do now is to
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stabilize the risk aversion that causes people to rush into the dollar or the yen or put money under mattresses. once you stabilize that and focus on the fact that the global economy is going to recover and that there is going to be enough money and we'll get more quantitative easing and so on, then there's a prorisk environment that sees strong rallies for asian markets and for commodities and a lot of the trends that were in place at the back end of last year. i think that's where we go next, but you have to stop the risk aversion. >> all right, kit, thank you very much for your insight. we want you to continue to stay on with us, head of strategy at ecu group, he's our guest host for the hour. still much more to come on "worldwide exchange." bernanke's exit plan answered the who, the what, the where and the why. but how about the when? we'll have more insight with our strategist, coming up.
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today on cnbc.com, it's all about at the u summit and the potential rescue plan today. the eu is wrestling about the timing and shape of any aid package for the troubled country. log on to find out what the experts are saying. and no surprise here, more bearish comments from mark farber. he says eventually everyone will
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default on their sovereign debt. plus, rio tinto is slightly more upbeat than its rival, bhp billiton. but the long-term uptrend in rio's stock has ended. you're watching cnbc's "worldwide exchange." credit suisse is very much in focus today. and the fourth quarter net profit missed forecasts. carolin schober is out in zurich with more. hi, carolin. >> reporter: hi, ross. first quarter net profits came in at below expectations. and even if you look past the two one up charges, one u.s. settlement but the other one on credit charges, pretax profit, that was bloeb below expectations here. at least according to most of
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the analysts. a couple of things to point out here, credit suisse giving us a confident outlook for 2010. they had jobs had a good start to the year and a strong climb in activity. also pretty full pipeline here. it's investment banking revenues here. fixed income revenues, quarter on quarter, we're down 68%. well, jobs watts kind of expected that these investment banking profits or revenues would be down from last quarter or from the third quarter. we saw that with peers across in germany and in europe. 68%, that's worse than expected. >> is this a real case that you've high righted there, surprise that banks are going to be the real revenue driver there? >> well, ross, that is certainly the hope of credit swiss and wealth management inflows. they looked pretty strong for the last quarter. we saw net you money at 5.4 billion swiss francs in the
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first quarter. but of course, credit suisse and ubs and julius baer, they were all hit by the italian stockses. if you compare that to ubs, that is substantially better than what we've seen at ubs. we're still fighting with the outflows after that tax drama with the u.s. with that, let me send jobs back to you. >> carolin, let me take jobs from here. what should be done with greece? it's not officially, believe jobs or not, on the agenda. so with politicians all proposing different idea webs the real question is who is in charge?
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welcome back to "worldwide exchange." it is 5:20 on the east coast of the united states. you're looking at a very snowy times square. jobs has even shut down washington, d.c. for the fourth straight day at the tune ofed 100 million per day. let's take a look at how u.s. markets are likely to open across the board. the dow is about 34 above fair value right now. s&p futures four above fair value and nasdaq futures, about seven above fair value right now. you know, the snow may be gone,
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but it is still reeking havoc on the u.s. east coast, as you saw from that live shot. government offices are closed for that fourth straight day at an estimated cost of 1 left lane million lost in productivity. and the senate is back in session this afternoon, but no votes were scheduled. the u.s. weekly inventory data has been postponed again until friday. january retail sales and december business inventories which were supposed to come out today have been moved to friday. we can weekly jobless claims forecast to drop to 4,068. marriott, pepsico, philip morris and vf corp. are all set to report today before the opening bell. and it's new york fashion week. it's the last time jobs will be held in bryant park. jobs moves over to lincoln
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center in september. i know you'll be watching. oh, i will. i wonder how many people will actually be wear thog hats. european storm markets are vefl out on what gets out in brussels. the ftse 100 up 1.25%. xetra dax up 0.4%. the cac 40 up a little less than that. we're getting more flashes out. there's a lot of contra things being said out of brussels at the moment. eu leaders will send a clear message backing details to be finalized on tuesday. some think that this may emerge the summit. when is an a bad not an eye package? maybe when they come out with the word.
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and i think maybe that's what we should expect. ahead of the u.s. open, we're talking about european stock markets. let's get more details. anent net is in frankfurt. >> the german dax is lifted by steelmakers after the biggest steel maker posted better than expected first quarter results. arubis is majority owned by zalskitter. and it's what thyssenkrupp has lifted elsewhere. they had in january that the first quarter trading was going on quite well. on the downside, we have daimler now and i understand you're trying to increase its stake in carmark. and this might mean another coast explosion, therefore,
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daimler. on the other side, we have infineon stocks to watch as we have this poxy battle going on there. munich is doing their shareholder meetings. stephane. >> a couple of french companies are having a hard time today on the french market, starting with alcatel-lucent. the company cut its forecast in terms of margins for this year. now expecting between 1% and 5%. that's to compare with the previous guidance of 1% and 5%. officially for the net profit, it's due to one-time items. and the stock is up 7%. air france klm is having a hard time. the airline yesterday announced wider than expected loss for the thirst quarter of this year and also has said that the fourth quarter would be actually at the same level of last year, which means lots of both 550 million euros. and last but not least, renault, the second largest carmaker in
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france announced a wider than expected loss for 2009, more than $3 billion euros. that is what is not expected. the company is expecting a 10% decrease this year. that explains the market reaction. adam, over to you now in singapore. >> thank you very much, stephane. overall, we had a positive session in the asian trading session here today. let's kick off with the greater china region. all these markets were in the green with the exception of the thai ex, which is closed for the lunar holiday. we saw a fair amount of optimism within these markets here today as the inflation data for the month of january pointed to the fact that maybe we may not have any monetary tightening by the chinese authorities given that it came in less than what the economy was expecting. up 1.5% in the month of january. we saw a fair amount of money sweeping into the financial services stocks given that the fears have subsided, that we
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could see possibly higher rates. they basically maintain appropriately loose monetary popularity and economic growth. they said the potential risks are increasing, which is interesting in light of the cpi data that came through today. that being said, we had a positive session across the board. most people will wait for the long holidays that will be a pawn off next week for the lunar holiday. on that note, back to you in the u.s. good morning. >> very good. thank you. good morning to you. up next, is president obama having a change of heart on big bonuses? find out his latest comments on excessive pay ahead on the program.
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welcome to "worldwide exchange." the headlines making news today, in the united states, sounding the alarm. the t.a.r.p. watchdog panel says a waive of commercial defaults could threaten hundreds of bank and the economic recovery. meanwhile, here in europe, a rescue plan is being worked on for greece. details of an imf-backed plan is beginning to be leaked in here in brussels. >> here in china, factory inflation rose. >> nice to have you with us here on "worldwide exchange." it is 5:30 in the morning on the east coast of the united states. here is how markets are likely to open, higher across the board after a choppy session yesterday with u.s. equities ending the day lower. the dow is about 23 above fair value. nasdaq futures about 7 above fair value.
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with the eu's efforts to help greece through his fiscal crisis, how are you looking inspect. >> we are up on those hopes. just a percent higher for the ftse 100. the xetra dax up 0.2% and 0.5% higher for the cac 40. commodity stocks are all firmer and there's other reasons elsewhere in the world for those commodity stocks to be higher, christine. >> the euro continues to be in focus. the hopes of a rescue package for greece is lifting the single currency. right now, euro against the dollar, 1.3754. sterling lsh dollar, 175602. euro/sterling, 0.8815. and dollar/yen, 89.86, dipping a little bit. all of this will be contingent on what is happening with the eu and greece. nicole. >> thanks very much, christine. we continue the conversation with kit juckes. kit, i want to get your reaction to this. we had a chief economist on from
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moody's just yesterday talking about the differences between p.i.g. countries. let's take a listen to what he said. actually, i don't think we have the sound bite. we'll try to play that in just a little bit. he was talking about the difference between contagion and confugue. what do you think it is going on with the p.i.g. countries? >> i guess some people might want to see that it's confusion that they're all the same. but i'm still inclined to say that we will continue to see some contagion, that there is too much debt, there is too little growth. to that extent, they're all in the same boat. they may not not as bad by quite a big margin as the situation in greece. but i take jobs further, i think the message to the ratings agency is, look, this is a sovereign debt problem for every major developed economy in the world, pretty much. and that includes the p.i.g.s in
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that sense. but given the size of the public sector debt and the weakness of the budget and the growth dividend from the p.i.g.s was spend, rather than getting their debt levels down, i think problems are inevitable. i think investors are confused about that and i say be careful. i think the contagion is pretty valid. >> well, here is what i'm trying to wrap my head around right now. we're all waiting for a big announcement by the eu. if we do get that announcement, okay, how long is it actually going to last? will greece be in trouble again? this is a country that has been in dpe default for much of its modern life. >> you know, what we're going to get is a group of big countries standing around and saying publicly, we're here to help
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this little country. but we're going to help them provide jobs as long as they do all the right things. they don't have a great track record of being successful in getting the size of their public sector down and getting their public wage sector down them. so we will see. you know, i think the problem may come back on greece. but what i'm sure of is that this problem comes back everything else. we started in dubai, we got the greece, we will move on, we'll be at the uk, the u.s., and at the euro zone before we're done. >> we're going to end up with a lot of austerity. there is an argument to say that in the end, this is not quite good for government bonds. >> yeah. this means interest rates stay even lower for even longer than they were before. i can't -- you know, at the moment, people ask you, when
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will the first rate rise come? you could have rates down here for five years on exceptionally low levels. on that basis, you have to keep yield curves. if you think that you're fought going to get major governments default, the solution to this is very low rates. if we don't have a big inflation problem, the concern is more quantitative easing down the track, and more downward pressure on g-7 currencies relative to the rest of the world. all of that trembles on. the issue with government debt, they're going to sell huge shrugs of jobs and they're going to have really low interest rates which dominates on any given day. and i think that's not an easy question to answer. >> hey, kit, this is christine. in the meantime, what happens to the euro? will it continue to come under pressure? >> well, the euro correlates so closely with the standard & poors index, it's unreal. i can't remember a time in a
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quart he of a century that i've been working in these markets where the correlation is so close. if on a day-to-day basis, you look at the euro/dollar exchange rate and on equity futures they move tick for tick. if this package from europe, if this support for greece makes us all feel better about risk generally, then the euro/dollar exchange rate will no doubt go up. that's not saying that we feel better about the euro. that's just saying we feel better about risk assets, about equities, about commodities, about asia than we did before. >> an eight-month low against the dollar, whew, that's scary, not. >> that comes back to the issue for all of these major central banks, which g-7 economy would like a strong currency? they would all love weak currencies. so the next piece of this is the americans saying, hang on a second. we all rather liked life when our currency was weaker.
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>> kit, stick around. we'll come back. speaking of currency, what can you get for a dollar these days? how about a tv show? more after the break.
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welcome to cnbc's "worldwide exchange." the dow jones industrial average is under new management. the cme group is buying 90% of the dow's business. the cme will pay dow jones $607 million and the dow brand name created in 1896 will still remain. the deal gives the cme a key asset beyond 2014 when its exclusive right to offer dow industries expires. the cme fell 2% on wednesday. activision posted better than spec'd earnings. the company mans to release another call of duty game for this year's holiday season. activision will start paying a dividend, which analysts say is a new concept for the industry.
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shares jumped 5% in after hours trading and today in frankfurt, shares are up about 2.5%. apple may sell episodes of u.s. tv shows fored 1. just a dollar. half the current price on the itunes store as a test. when the new ipad goes on sale next month. the financial times says the idea is to see whether lower prices will spark sales of these shows. the report says some u.s. tv networks only agreed to test price after a month of negotiations with apple. a buck. ross. >> jobs would have cost a lot more than that. the prime minister of greece says he doesn't wish to seek help from the eu. european leaders have agreed to a package of eight from greece, apparently. this is what we're hearing. the plan will draw on thor and stees of the central bank and the imf, but no money. the rescue will as i say,
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draw on funds from the imf. at the same time, the greek prime minister told a newspaper that his country needs psychological and political support rather than monetary support from europe. he paid a visit to nicholas sarkozy to discuss the situation in greece. he assured that he was taking all necessary steps. >> the last few days, i have taken extra measures, specific measures to make sure that this program is even furthermore guaranteed. we are ready to take any necessary measure in order to make sure that the goal of cutting our deficit in 2010 to the purge of 8.7 of our gdp will
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be -- we are ready to take any measures in order to take this sure and guaranteed that we reach this goal. so i want to be very clear about that. >> obviously, the greek situation front and center for u.s. investors, but so is the fed. joining us now, dan greenhouse, chief economic strategist at miller, tabeck and company. and still with us, kit juckes from ecu. dan, i want to start with you. you say the fed is going to remove liquidity. we always knew that. so why do you think everybody is so amazed when bernanke comes out and says jobs? >> i agree with you. i don't know that there is anything necessarily new in what he said yesterday. certainly the idea that monetary policy will be tightened over the next couple of months is something that everybody should have been well aware of right now. the fact that he suggested the discount rate would go up first and perhaps soon is not anything that those of us that follow
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this even moderately closely would find surprising. >> so does that mean i don't have to react to it, dan, with your vlt investment advice or not? >> well, i mean, certainly the fact that the fed chairman stated out loud that the discount rate would be going upwards in the next couple of months, i would imagine, even as soon as the next meeting is something you need to be aware of. but i wouldn't view the hike in the discount rate as quote/unquote tightening. it's just more in line with what i would call policy normalization, that is region returning to relationships that existed prior to the credit crisis. historically, the discount rate trades at a certain rate above fed funds. as we return to those levels, that should be seen as a healthy development. >> with banks shrinking at a fairly alarming rate, the chance of the fed to agretsively reduce bank reserves is limited, isn't jobs?
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>> i'm sorry? >> with banks lending at what some would call an alarming rate, it's quite reserve, isn't it? >> certainly. the idea that policy would normalize over the next couple of months is healthy. that is not to say that there will be anything resembling an aggressive tightening of poll. there remain many headwinds to economic growth, even the most bullish forecasts don't see the unemployment rate tipping below 9% over the next couple of quarters. and in an environment such as what many believe is unfolding, the idea that they would aggressively tighten and remove reserves in the banking system doesn't mesh with those forecasts. i don't see it happening. that's not to say it won't perhaps in 2011, but at least for 2010, there's a lot to be worried about.
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>> dan, this is christine. who would ben bernanke have to say in his statement? >> the markets and ben bernanke should really be two different things. what ben bernanke should be focused on is operating monetary policy in a way that is most conducive to low unemployment and stable prizes. and if he is successful in achieves those two ends, the markets will take care of themselves. i think what he needs to do is be credible. corporate earnings, the s&p 500 will take care of itself. >> let's talk about how we got these fed statements. it is snowing in washington. washington is shut down. we didn't see bernanke, but we read his comments. what is the snow's impact going to have on weekly jobless claims, on gdp?
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dan, let me start with you. >> while i'm in new york, i understand the impact of snow. that had, what you need to look at jobless claims and the snow may have is separate from the broader trend in jobless claims. wheel i spent several weeks arguing with clients, that is to say that they moved into a somewhat healthy area, they have been upward sticking in the last couple of weeks. jobless claims are turning upwards a little bit here and i want to get a little bit more data in hand before making any broader statements. but they are return to go laefl that's not exact will appeasing, so to speak.
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>> and kit, your thoughts on snow economics? >> it makes it difficult to read anything into the data. the position of pretty much everybody i talked to in markets is that it's going to be difficult to get this transition in the states or anywhere else from policy that grows to something self-sustaining. so okay, growth walls stronger at the end of last year or growth is a bit stronger now. but there's a really big risk that it slows down later. if i can't read anything into the economic data at the moment, those fears about, you know, what is going to happen next just get bigger. so what we need -- and it's back to the point about bernanke. what we need for people to become comfortable with is the slowdown in growth that's inevitable this year isn't going to be too much of a slowdown. and it's all going to be okay. easy monetary policy and some growth resumes. put the snow in and inevitably, easy things like not much activity happens because we all stay home and then an inability to read into the trends makes us
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more and more nerve was that this policy driven recoveryww might run out of steam. so i think that's the difficulty with this. >> kit, we appreciate your time. dan, do stay with us. and still much more to come on the program. a lot of the economic data is being delayed because of that inclement weather, as you know, so jobless claims will be out as scheduled. stay tuned for more ahead of the break.
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okay. nine minutes until "squawk box" is coming up. hey, beck. >> good morning, everybody. the east coast may be digging out this morning, but there is plenty of heat coming out of washington today. the president is about to release his economic report to congress. christine romer will be our special guest to talk about this. plus, listen up, the t.a.r.p.
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commission putting out its latest report. elizabeth warren is the chairman of the congressional oversight panel. she's going to join us to tell us why this would overwhelm a weak financial system. plus, we'll get comments on something she said earlier this week about jamie dimon that caused some fireworks, as well. also, burlington northern santa fe shareholders, they're going to vote today on berkshire hathway. the rail giant's president and ceo matthew rose will talk to us first on cnbc today about this big vote, what it means and what he's been seeing with some of his freight numbers, with as well. also, auto nation is about to roll out quarterly results. mike jackson will bring us the numbers live at 7:00 a.m. we'll get a chance to talk with it and about whether the toyota recall is going to consumer dealers. "squawk box" is coming up at the top of the hour and ross, we'll sent it back to you.
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>> thank you. >> back here stateside, dan, president obama is coming out with some comments. it has a lot of people taking notice right now. because just a month ago, many would have said that obama was launching a war on the banks. is he changing his tune with his latest comments about bank bonuses? >> i don't think he's changing his tune. i think this is a man who genuinely believes or is genuinely attempting to thread the needle between the left and the right in the i'd. as he pointed out, the left is very angry at barack obama and sees him as a friend of business. there are a lot of people who were arguing over more string yint restrictions on bonuses, more stringent focus on bank activities, a return to depression era restrictions. there's a lot of people on the left that were not happy of barack obama and i think that's
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reflective of his statements yesterday in that he doesn't see himself as the enemy of business that many on the right are portraying about. >> dan, is it because people just don't know what to expect from regulation on capitol hill so we're really focusing in on any and every statement coming out of washington these days? >> well, certainly. and at the same time, any and every bit of regulation is seen as restrictive to business and restrictive to economic growth. that is probably not true in the aggregate, but certainly i think it's -- it's probably clear that coming out of 2008, two things were all but certain. in 2009, irrespective of who won the presidency, that was higher taxes and higher regulation. barack obama is more or less following along that trend. i find it hard to believe that had john mccain won the presidency, you would have had something similar. but besides that, i think it's imperative for the right and those who believe strongly in anti-regulation, or at least as
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little regulation as possible to fight quite hard against what they see as what may become stringent regulation. we are in an increasingly globalized financial environment and if the united states undertakes some financial restrictions that are not undertaken by several other countries including london and france, for instance, you are going to have .migration to those areas with less regulation and in some cases less taxes that ends up hurting long-term growth in the i'd in the long-term. >> washington continues to set the tone for markets. dan greenhouse, we appreciate your time. chief economic economist at miller tavek coming to us from paris. >> thank you. >> and yesterday, futures came off the lows of their session. we have the dow, s&p and nasdaq above fair value. at this hour, it has been that way for the last couple of hours. that's going to do it for today's show. i'm nicole lapin in the united states.
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